RE:RE:Here is what I would have asked today.....For a few years running, DCI was making more revenue in it's card and pre-paid MasterCard business than it made in ATMs. Fortunately for DCI, they expanded their ATM business through acquisition in Australia and the UK at the same moment their card business imploded due to the Cash Store collapse.
At one time, DCI dipped into the Phone Card market, however, that appears to be history. About a decade ago, DCI also entered into the Debit Terminal segment, using a surcharge model, however, that never really took off due to intense competition from the banks. Although they still deploy Debit Terminals, the revenue on the product is negligable.
DCI is one of about a half dozen companies in Canada, outside of the major banks, that operate a Processing Switch. As a member of Interac, Visa, MCard, etc, they are able to process any type of tranaction imaginable, over any platform. That is where they are apparently trying to focus, as they are trying to leverage their Threshold purchase into something greater. The theory here is that, although they might make only a penny or even a fraction of a penny per transaction, tens of millions of transaction can translate into major revenue. Regardless of what eventually happens to cash payments, Electonic Processing will never go away.
The issue is that, in this space, they are competing head-to-head with the major banks. It's truly a David and Goliath battle.
So....for now, the lion's share of DCI's revenue is from the declining ATM industry. Now....as an aside, I don't think that ATM business will collapse anytime in the next generation or two, and there is certainly money to be made, however, DCI has the albatross of massive distributions they need to make every month, which smaller, more nimble companies don't have. Kind of like an upstart Westjet stealing business from Air Canada in the early years. Not very difficult to do.
Ultimately, I think the distribution from DCI is safe for the next few quarters, and likely into the mid-term future, depending, of course, on DCI's ability to continue to acquire smaller companies.....Where I think the risk is, is that over time, the share price will slowly ratchet down as investors see the writing on the wall of lower revenues leading to an evenual reduction of the dividend.
That could all change if DCI comes out with a truly innovative product, or finds a really profitable niche like they did with the Payday Loan companies. However, I don't think DCTag will be it....